Market forces + Kingfisher | The Guardianhttps://www.theguardian.com/business/series/market-forces+kingfisher
Indexen-gbGuardian News and Media Limited or its affiliated companies. All rights reserved. 2016Sat, 10 Dec 2016 03:36:50 GMT2016-12-10T03:36:50Zen-gbGuardian News and Media Limited or its affiliated companies. All rights reserved. 2016The Guardianhttps://assets.guim.co.uk/images/guardian-logo-rss.c45beb1bafa34b347ac333af2e6fe23f.pnghttps://www.theguardian.com
FTSE 100 adds 1% but Compass and Kingfisher updates disappointhttps://www.theguardian.com/business/marketforceslive/2016/nov/22/ftse-100-adds-1-bit-compass-and-kingfisher-updates-disappoint
<p>Leading shares lifted by continuing rise in oil price on hopes of Opec deal</p><p>Leading shares are moving higher, following Wall Street’s record breaking performance on Monday, despite a couple of high profile declines.</p><p><strong>Compass</strong> is down 54p or nearly 4% at £13.37 after the catering group reported a 5% rise in full year revenues to £19.9bn - just below expectations - and a 5.6% increase in profit to £1.44bn. The company pointed to strong demand in the US and said it was positive about the coming year, but said growth would be weighted to the second half of the year. Analysts pointed to slowing momentum, with Wyn Ellis at Numis saying:</p><p>Compass’s full year results are marginally disappointing with operating profit of £1,445m compared to our forecast of £1,448m, but with organic growth slowing to, we estimate, around 4% in the fourth quarter (+5.6% for quarters one to three, after 5.8% growth in the first half) making +5.0% for the full year (North America +8.1%; Europe +2.8%; rest of the world excluding offshore and remote, +3.6%). Operating margin is flat at 7.2% but the full year dividend is up 7.8% to 31.7p, in-line with the 7.8% increase in constant currency earnings per share.</p><p>Preliminary earnings per share is in line with our estimate and 1% ahead of consensus despite a slowdown in organic revenue to 3.1% in fourth quarter, driven by Europe and the rest of the world. Consequently, although outlook comments are upbeat, they reiterate Sodexo’s recent message that momentum will be second half weighted in 2017.</p><p>Compass remains a quality company but on a 2017 PE of 20 times, an EV/EBITDA of 13 times and a free cash flow yield of 4% this appears full factored into the valuation for a stock capable of delivering high single digit compound earnings growth, in our view.</p><p>Similar third quarter trends to the first half, with France weak, the UK robust and Poland strong. The shares have held up versus the sector post the Brexit vote, due to foreign exchange benefits (International around 60% retail profits) rather than underlying trading, with Group sales up just 1.3% at constant currency. Valuation does not reflect our view that a weak French market is likely to deteriorate in 2017 given the election and that the UK is also likely to slow on our assumption of weakening consumer demand. Our target price is upped to 275p (previously 265p) reflecting a changed peer group, but sell reiterated.</p><p> Equities are almost universally higher this morning, as London traders woke to news that US markets had posted record closes across the board. The week before Thanksgiving is never a good time to be short, since those of a bearish disposition tend to suffer a fate akin to a roasted turkey.</p><p>Goldman Sachs’ decision to turn into commodity bulls has bolstered the London mining community, aside from precious metals miners, with the investment bank remaining downbeat on the outlook for gold.</p><p>We acknowledge that the Inmarsat thesis centres on the concept of in-flight communication gaining real traction and at present there are mixed views, but we see scope for Inmarsat unlocking value given the size of the market. We have carried out bottom-up analysis of the market potential for in-flight communication and around 40% of our target relates to the European aviation opportunity. Given Inmarsat has underperformed the Telco sector by 16% year to date, we see current levels as a good entry to gain exposure to strong growth. </p> <a href="https://www.theguardian.com/business/marketforceslive/2016/nov/22/ftse-100-adds-1-bit-compass-and-kingfisher-updates-disappoint">Continue reading...</a>BusinessStock marketsCompassKingfisherBabcock InternationalAnglo AmericanBHP BillitonInmarsatTue, 22 Nov 2016 09:58:08 GMThttp://www.theguardian.com/business/marketforceslive/2016/nov/22/ftse-100-adds-1-bit-compass-and-kingfisher-updates-disappointPhotograph: David Davies/PAPhotograph: David Davies/PANick Fletcher2016-11-22T09:58:08ZFTSE 100 higher ahead of Fed but IG hit by subdued trading post-Brexithttps://www.theguardian.com/business/marketforceslive/2016/sep/20/ftse-100-higher-ahead-of-fed-but-ig-hit-by-subdued-trading-post-brexit
<p>Company says clients saw limited trading opportunities after EU vote</p><p>Subdued stock markets following the Brexit vote hit UK revenues at online trading group <strong>IG</strong>, but following the news its own shares are anything but subdued.</p><p>They have fallen more than 3% to 897p as it reported that its revenues from UK and Ireland fell by 1.8% to £55.4m in the first quarter. But Europe rose 13% and overall revenues rose 5.1% to £111.4m. It said:</p><p>Financial markets through July and August became increasingly subdued and presented limited trading opportunities for both current and new clients.</p><p>IG reported first quarter revenues of £111.4m, 7% below our estimate of £120.0m where our revenue forecasts for this year were materially ahead of consensus. The quarter was characterised by an unusually divergent trend in customer numbers, revenue per client and performance by geography... We are reducing our revenue estimate for this year by 4% to £500.0m (which is in line with current consensus) from £518.8m which takes our earnings per share forecast to 47.0p from 50.5p... The key IG message remains enhanced growth driven by digital marketing, superior IT. The substantial, ongoing customer growth is a good guide to long-term shareholder value creation of the group’s growth strategy. IG is currently being valued at 19.7 times earnings.</p><p>The main reason for our sell recommendation is valuation. With independent estimates of underlying market growth at 7-8% (albeit with some short term volatility), combined with periodic investment in both the trading platform and digital marketing activities, we think that a 12 month forward PE multiple of 15 times adequately captures IG’s prospects. Therefore, ahead updating the model, our last published fair value of 715p remains too far below the current price for us to consider moderating our sell stance on this well-managed group.</p><p>We see no chance of a production freeze agreement materialising. If a deal nonetheless should materialise it would be a conditional deal where Iran, Libya, Nigeria and Venezuela are allowed to lift their production to 4.0 mb/d, 1.6 mb/d, 2.0 mb/d and 2.4 mb/d respectively. That would place an OPEC production “freeze cap” at about 36.2 mb/d versus an August production of 33.7 mb/d. Not much of a freeze in our view.</p><p>Leading the FTSE higher are a plethora of mining stocks, amid talk of an ‘inflection point’ for both commodity prices and the Chinese economy as a whole. Comments from Rio Tinto CEO Jean-Sebastien Jacques served to solidify the growing feeling that we may have seen a bottom for commodity prices, as Chinese data shows signs of improvement and Moody’s upgraded their base metals view from negative to stable. Today’s six year high in Chinese house price growth comes off the back of a recent outperformance in investment, factory output and retail sales figures for August. Despite improving data, the key question is whether such improvements are merely stimulus driven and as such unsustainable over the long term.</p><p>A slight beat at the pretax profit level (UK, Poland) and encouraging noises regarding the short-term progress in the Transformation programme. We do not expect consensus to change significantly today and we remain positive on the shares long term. </p> <a href="https://www.theguardian.com/business/marketforceslive/2016/sep/20/ftse-100-higher-ahead-of-fed-but-ig-hit-by-subdued-trading-post-brexit">Continue reading...</a>BusinessStock marketsIGInternational Airlines GroupeasyJetBHP BillitonKingfisherRegusTue, 20 Sep 2016 09:00:55 GMThttp://www.theguardian.com/business/marketforceslive/2016/sep/20/ftse-100-higher-ahead-of-fed-but-ig-hit-by-subdued-trading-post-brexitPhotograph: Martin Oeser/AFP/Getty ImagesPhotograph: Martin Oeser/AFP/Getty ImagesNick Fletcher2016-09-20T09:00:55ZFTSE shrugs off US rate concerns, with Kingfisher boosted by positive updatehttps://www.theguardian.com/business/marketforceslive/2016/may/24/ftse-shrugs-off-us-rate-concerns-with-kingfisher-boosted-by-positive-update
<p>DIY firm lifted by strong performance from Screwfix and Polish operations</p><p>Leading shares have shrugged off the prospect of an imminent US rate rise which has been a dampening factor in recent days.</p><p>After an early dip, the <strong>FTSE 100</strong> is now up 29.24 points at 6165.67 although investors are still cautious as the Eurogroup meets to decide whether to release the latest tranche of bailout funds.</p><p>We have made a solid start to the year, trading in line with expectations. In addition, I am pleased with the early progress we are making on our operational milestones for this year, the first year of our ambitious five year plan.</p><p>The home improvement market is growing and buoyant sales at Screwfix reflect an increasing trend to call a man in rather than DIY. We are seeing the same in France with the consumer-facing business Castorama going backwards while trade-focused Brico Depot, put in a decent performance. </p><p>Against the back drop of store closures, like for like sales at B&amp;Q grew at a decent pace. Seasonal sales were down for the second year running, but this is just the ongoing return to “normal” levels of activity after a 30% surge in the first quarter of 2014/15.</p><p>The significant change to the operational board over the last three years is, we believe, leading to a major shift in the company’s culture and strategy. There is also a growing acceptance that after a number of ‘false dawns’, the ranges and the assortments of the international businesses have to be more properly integrated and the diversity of its cross border formats reduced. We are raising our target price to 360p from 320p and would look to buy the stock on weakness. Our only concern in the short term is the current rating. <strong> </strong>Since the beginning of September 2014, the stock has steadily outperformed the FT All Share by over 20% over this time. It is rated at 16.0 times 2017 our revised earnings forecasts.</p><p>Imperial is executing strongly. Organic sales momentum is improving and margin/cash generation increases underpin 10% plus dividend growth. Moreover, we are increasingly confident margins will surprise to the upside and that the US is performing ahead of expectations.</p> <a href="https://www.theguardian.com/business/marketforceslive/2016/may/24/ftse-shrugs-off-us-rate-concerns-with-kingfisher-boosted-by-positive-update">Continue reading...</a>BusinessStock marketsKingfisherTravis PerkinsImperial TobaccoCoca-Cola Hellenic Bottling CompanyTue, 24 May 2016 08:41:06 GMThttp://www.theguardian.com/business/marketforceslive/2016/may/24/ftse-shrugs-off-us-rate-concerns-with-kingfisher-boosted-by-positive-updatePhotograph: Darren Staples/ReutersPhotograph: Darren Staples/ReutersGuardian Staff2016-05-24T08:41:06ZFTSE falls ahead of US jobs data, with Inmarsat and InterContinental on the slidehttps://www.theguardian.com/business/marketforceslive/2016/may/06/ftse-falls-ahead-of-us-jobs-data-with-inmarsat-and-intercontinental-on-the-slide
<p>Brokers downgrade satellite group while InterContinental’s figures disappoint</p><p>Leading shares are heading lower again after Thursday’s brief respite, ahead of the day’s big economic event, the US non-farm payroll numbers.</p><p>With investors seeking havens, gold and silver remained in demand, helping push <strong>Randgold Resources </strong>up 2.5% to £59.25 and Mexican precious metals miner <strong>Fresnillo</strong> 10p higher to £10.49.</p><p>Inmarsat posted first quarter results below expectations and cut core 2016 estimated revenue guidance. The company highlighted tough trading conditions in its legacy business and also indicated that getting GX [broadband services] operational was taking longer than expected, delaying revenue generation. Positively, Inmarsat expects more revenues from Ligado and remains confident about the midterm outlook. However, in our view these results illustrate well the challenges the company is facing (volatile demand, ramp up of new product). Longer term we recognise the growth opportunities but also the fast growing supply in the industry. We cut estimates, and even after the stock price correction we consider that the valuation does capture the different downside risks. We remain underweight.</p><p>InterContinental released a first quarter trading update showing a slowdown in revenue per available room growth to +1.5%. While this is partially due to the distortion of Easter timing and so should reverse in the second quarter, several markets are also subdued by weak oil markets (management says). More rooms were removed (8,000) than added (5,000) which needs further explanation but the company reported solid growth in net system size + 2.7% (742,000 rooms) and pipeline continues to build with 15,000 rooms signed bringing the pipeline to 220k with 45% under construction. With the $1.5bn cash return imminent, our price target of 2800p and hold recommendation remain unchanged.</p><p>We think that <strong><a href="https://www.theguardian.com/business/2016/jan/18/homebase-to-disappear-from-uk-as-australian-brand-bunnings-takes-over">Wesfarmers’ recent acquisition of Homebase</a></strong> may be one of the most significant corporate events in UK retail since Wal-Mart acquired Asda back in 1999. We believe that Bunnings will prove a formidable competitor to B&amp;Q and reiterate our underweight rating on Kingfisher. </p> <a href="https://www.theguardian.com/business/marketforceslive/2016/may/06/ftse-falls-ahead-of-us-jobs-data-with-inmarsat-and-intercontinental-on-the-slide">Continue reading...</a>BusinessStock marketsRandgold ResourcesFresnilloInmarsatInterContinental HotelsInterserveKingfisherFri, 06 May 2016 08:40:40 GMThttp://www.theguardian.com/business/marketforceslive/2016/may/06/ftse-falls-ahead-of-us-jobs-data-with-inmarsat-and-intercontinental-on-the-slidePhotograph: Andrew Winning/REUTERSPhotograph: Andrew Winning/REUTERSNick Fletcher2016-05-06T08:40:40ZFTSE edges higher but British Gas owner Centrica drops after £750m cash callhttps://www.theguardian.com/business/marketforceslive/2016/may/05/ftse-edges-higher-but-british-gas-owner-centrica-drops-after-750m-cash-call
<p>Company to raise funds to reduce debt and pay for two acquisitions</p><p>Leading shares are edging higher after their recent tumble, but the moves are not convincing.</p><p>And British Gas owner <strong>Centrica </strong>is missing out, dropping nearly 8% to 213.5p after it announced it planned to raise around £750m with a placing of 350m shares. It said the funds would be used to cut its debt mountain and also to pay for two acquisitions, energy management group Neas for £350m and another “customer facing” business worth around £15om.</p><p>Centrica’s two proposed acquisitions are in line with its strategy of strengthening its mid- and downstream operations. Raising a modest amount of equity to fund these acquisitions is understandable.</p><p>Where there is some surprise with today’s announcement is with the additional £400m being raised to pay down net debt. Raising equity is an expensive way of paying down debt. Nevertheless Centrica will clearly be in a modestly stronger financial position post the placing, albeit with existing shareholders facing a near 7% dilution. Centrica’s new management have been trying to establish a reputation for tight capital management; it is difficult to say whether today’s announcement enhances or diminishes that reputation.</p><p>In a surprise move, Centrica has today announced that it is looking to issue around 7% of its equity in a placing. It says that the strategy is on track, but this will allow it to shore up its BBB+ credit rating in the weak commodities environment, while also allowing it to pay for two acquisitions with a combined value of £350m (Neas already announced for £200m and one to be confirmed soon for £150m). Today’s move was not expected, but there does not appear to be any hidden warning in this statement, which reconfirms the guidance that was given in last month’s trading update. So overall, we still believe that Iain Conn and his team are moving Centrica in the right direction. The yield on the final dividend is 3.5% in its own right, and the share will go ex of this on 12 May (payable 23 June). </p> <a href="https://www.theguardian.com/business/marketforceslive/2016/may/05/ftse-edges-higher-but-british-gas-owner-centrica-drops-after-750m-cash-call">Continue reading...</a>BusinessStock marketsCentricaRolls-RoyceMorrisonsBTGreggsTullow OilKingfisherLondon Stock ExchangeBPThu, 05 May 2016 08:41:36 GMThttp://www.theguardian.com/business/marketforceslive/2016/may/05/ftse-edges-higher-but-british-gas-owner-centrica-drops-after-750m-cash-callPhotograph: Darren Staples/REUTERSPhotograph: Darren Staples/REUTERSNick Fletcher2016-05-05T08:41:36ZFTSE 100 falls as oil slides but Anglo American lifted by diamond saleshttps://www.theguardian.com/business/marketforceslive/2016/jan/26/ftse-100-falls-as-oil-slides-but-anglo-american-lifted-by-diamond-sales
<p>Investors unnerved again by Chinese slowdown and crude price fall</p><p>With global markets tumbling again as oil slides and worries about a Chinese slowdown re-emerge, it’s no surprise to see precious metal miners bucking the trend as investors seek the havens of gold and silver.</p><p>More surprisingly, <strong>Anglo American</strong> is up 3.7p at 230.3p. But its gains can be attributed to news that rough diamond sales from its De Beers group had more than doubled from $248m to $540m in the first sales period of this year compared to the final one of 2015.</p><p>A year of strong growth with plenty more to come. Full year results were in line with our expectations, with pretax profit rising by 32% to £154m. The group remains on track to meet it’s revenue targets over the next four years, with volumes set to grow by around 50% by 2019. The shares continue to look good value to us trading at a discount to the sector, despite offering the highest net asset value and dividend growth over our forecast period. </p><p>We think the market is probably right to be initially sceptical of the financial aspects of the ‘One Kingfisher’ programme, given the forecast downgrades required for years 1-3, the cash implications and uncertain nature of the back-end weighted profit benefits, although sentiment could improve if the plan can deliver tangible benefits. The shares are trading in line with the sector at 15 times PE to 2016 but we think the heightened risk and liquidity implications are unfavourable and downgrade our recommendation to reduce [from hold]. </p> <a href="https://www.theguardian.com/business/marketforceslive/2016/jan/26/ftse-100-falls-as-oil-slides-but-anglo-american-lifted-by-diamond-sales">Continue reading...</a>BusinessStock marketsAnglo AmericanRandgold ResourcesFresnilloRoyal Dutch ShellBPBarclaysDixons CarphoneTalkTalkHousing marketKingfisherTue, 26 Jan 2016 09:48:43 GMThttp://www.theguardian.com/business/marketforceslive/2016/jan/26/ftse-100-falls-as-oil-slides-but-anglo-american-lifted-by-diamond-salesPhotograph: Chris Ratcliffe/Bloomberg/Getty ImagesPhotograph: Chris Ratcliffe/Bloomberg/Getty ImagesNick Fletcher2016-01-26T09:48:43ZFTSE reverses as oil price falls, while Lloyds hit by downgradehttps://www.theguardian.com/business/marketforceslive/2016/jan/25/ftse-reverses-as-oil-price-falls-while-lloyds-hit-by-downgrade
<p>JP Morgan cuts target price for Lloyds but keeps overweight rating</p><p>An early rally on stock markets has soon fizzled out, as oil once again goes into reverse.</p><p>Among the fallers is <strong>Lloyds Banking Group,</strong> down 2.05p or 3% at 64.81p as JP Morgan cut its price target on the bank from 98p to 90p but kept its overweight rating. It reduced its forecast for Lloyds’ net interest margin, saying it could decline further in 2016 in the absence of interest rate rises. Last week Bank of England governor Mark Carney said <strong><a href="http://www.theguardian.com/business/2016/jan/19/bank-of-england-mark-carney-rules-out-uk-interest-rate-rise">now was not the right time to raise rates</a></strong>.</p><p>We’ve got a rather troubling start to the European session with crude oil having sold off quite sharply over the last hour or so. We remain well up on the prices posted at the middle of last week, but this weakness could unsettle equity markets which soared last week as oil prices appeared to find something of a foot-hold. </p> <a href="https://www.theguardian.com/business/marketforceslive/2016/jan/25/ftse-reverses-as-oil-price-falls-while-lloyds-hit-by-downgrade">Continue reading...</a>BusinessStock marketsLloyds Banking GroupBPAntofagastaKingfisherARMRandgold ResourcesFresnilloMon, 25 Jan 2016 09:44:18 GMThttp://www.theguardian.com/business/marketforceslive/2016/jan/25/ftse-reverses-as-oil-price-falls-while-lloyds-hit-by-downgradePhotograph: Alicia Canter for the GuardianPhotograph: Alicia Canter for the GuardianNick Fletcher2016-01-25T09:44:18ZNext, Kingfisher and Tesco hit by broker downgradeshttps://www.theguardian.com/business/marketforceslive/2015/dec/07/next-kingfisher-and-tesco-hit-by-broker-downgrades
<p>Nomura reduces ratings on Next and Kingfisher, while Morgan Stanley cuts Tesco</p><p>With the key Christmas shopping period well underway, analysts at Nomura have been dispensing some festive joy - and gloom - across the retail sector.</p><p>The bank has cut its rating for <strong>Next</strong>, down 40p at £79, from buy to neutral and its recommendation on DIY specialist <strong>Kingfisher</strong>, 6.4p lower at 347p, from neutral to reduce. It said:</p><p>[Next’s] sources of prospective growth in international and brands are more tenuous than the long-term UK channel shift that so supported its delivery in recent years. As a developing theme, the group’s stores are now beginning to outperform expectations relative to online, perhaps indicating that the intensive space relocation of recent years has positioned the business for growth in store sales now that online penetration (for Next) is slowing. Our downgrade reflects the risk of some share price weakness ahead of the group’s 2016 guidance update in January. </p><p>[On Kingfisher] we have no issues with Kingfisher’s <a href="http://www.theguardian.com/business/2015/sep/15/kingfisher-to-open-200-uk-screwfix-outlets"><strong>proposed unifying strategy </strong></a>as a means of offering differentiated home improvement products at low prices to customers. We think it will drive long-term market share. We are unclear at this juncture as to the programme’s capital and revenue costs. It seems likely that the requirements of a major supply chain change, refitted store estate over time and employee costs of implementing the programme will put pressure on shareholder returns (and the buy-back in 2016). As such, we have cut our estimates for some added costs and capex and no buy-back. Our view may prove short-lived, but we think the risks warrant trimming positions.</p><p>With continued employment and average earnings growth, we expect disposable income to grow around 3.5% in 2016 despite fiscal austerity. With staples inflation low, this points to another year of mid-single-digit discretionary consumption growth in the UK. Real wages are growing across Europe. We expect non-food retail to continue to grow below discretionary consumption as consumers prioritise cars and holidays over ‘stuff’. Within the sector, discounters, online and speciality retailers will likely continue to flourish at the expense of the big box. </p><p>We expect ‘strong’ trading updates from Asos, ABF and WH Smith in the coming weeks. Kantar data (ABF), soft comps (Asos) and improving books market and traffic stats all support these views. The rest remains highly uncertain, in our view.</p><p>For the apparel subgroup we expect unseasonable weather in November to affect reports from H&amp;M. The extent to which Debenhams, M&amp;S and Next can recover lost ground in the next couple of weeks is key to outcomes. The extent to which online cannibalises (M&amp;S/Debenhams) or helps (Next) may prove critical. For M&amp;S we already cut our third quarter estimate some weeks ago. Similarly in homewares, Dunelm is likely to be hoping for lower temperatures to induce ‘hibernating customers’ to buy its seasonal ranges. </p><p>We have been buyers of Tesco shares for the restructuring potential and the portfolio optimisation story. With the latter being on hold and headwinds in the UK sector offsetting self-help opportunities at Tesco, we think valuation is fair today. Move to equal weight, with a price target of 160p. </p> <a href="https://www.theguardian.com/business/marketforceslive/2015/dec/07/next-kingfisher-and-tesco-hit-by-broker-downgrades">Continue reading...</a>BusinessStock marketsNextKingfisherWH SmithDixons CarphoneTescoMon, 07 Dec 2015 12:31:58 GMThttp://www.theguardian.com/business/marketforceslive/2015/dec/07/next-kingfisher-and-tesco-hit-by-broker-downgradesPhotograph: Jonathan Nicholson/Demotix/CorbisPhotograph: Jonathan Nicholson/Demotix/CorbisNick Fletcher2015-12-07T12:31:58ZFTSE 100 fades ahead of ECB meeting, while Travis Perkins drops 7%https://www.theguardian.com/business/marketforceslive/2015/oct/22/ftse-100-fades-ahead-of-ecb-meeting-while-travis-perkins-drops-7
<p>Wickes owner warns profits will be at low end of expectations after poor summer</p><p>Leading shares are heading lower again ahead of the latest meeting of the European Central Bank. Investors are hoping for a dovish tone from ECB president Mario Draghi, but few believe that an announcement of an extension to quantitive easing will be made.</p><p>The biggest FTSE 100 faller is <strong>Travis Perkins</strong>, down 147p or more than 7% at £18.16, as the building materials group and Wickes owner warned that profits would be at the lower end of market expectations. It blamed weaker than expected demand in the repair, maintenance and improvement market during the summer.</p><p>As with others in the sector, Travis Perkins is finding the trading environment in the UK tough. It has warned that it experienced weaker summer demand. However, it is putting a brave face on things and claiming that lead indicators point to a recovery during the fourth quarter. Santa may bring an early Christmas present, but we are not holding our breath. We will be reviewing our (previously broadly consensus) forecasts following the conference call. But for now they are clearly under review. However, given the deterioration in trading we are maintaining our sell recommendation and reducing our target price from 1950p to 1650p.</p> <a href="https://www.theguardian.com/business/marketforceslive/2015/oct/22/ftse-100-fades-ahead-of-ecb-meeting-while-travis-perkins-drops-7">Continue reading...</a>BusinessStock marketsTravis PerkinsKingfisherAnglo AmericanPearsonSmiths GroupWolseleyBAE SystemsGKNThu, 22 Oct 2015 08:46:47 GMThttp://www.theguardian.com/business/marketforceslive/2015/oct/22/ftse-100-fades-ahead-of-ecb-meeting-while-travis-perkins-drops-7Photograph: Frank Baron for the GuardianPhotograph: Frank Baron for the GuardianNick Fletcher2015-10-22T08:46:47ZFTSE falters ahead of central bank updates, with Glencore losing ground againhttps://www.theguardian.com/business/marketforceslive/2015/oct/08/ftse-falters-ahead-of-central-bank-updates-with-glencore-losing-ground-again
<p>Investors cautious as copper prices edge lower and poor Germany export data</p><p><strong>Glencore</strong>’s rollercoaster ride is continuing, as continuing worries about its debt levels send its shares lower again.</p><p>With London copper prices edging lower and a broker downgrade of its price target adding to the pressure, the company is currently down 1.45p to 122.55p. Its shares have lost more than half of their value this year on<a href="http://www.theguardian.com/business/2015/oct/07/glencore-banks-exposure-shares-commodities"><strong> concerns about its borrowings</strong></a>, although a statement last week from the company designed to ease these worries has seen them edge off their lowest levels. Canaccord Genuity has kept its speculative buy rating on the business but cut its target price from 220p to 190p to reflect lower commodity prices. It said:</p><p>Even after removing readily marketable inventories from net debt, Glencore carries mid- year net debt of US$29.6bn, significantly more than any of its FTSE 100 mining peers. However, a review of statements from Moody’s and S&amp;P demonstrates that the ratings agencies are comfortable leaving Glencore’s investment grade ratings unchanged at BBB/Baa2, particularly given the 7 September announcement. Both agencies have moved to a negative outlook, which seems sensible given the impact on cashflows should commodity prices fall demonstrably lower on a sustained basis. While both agencies note that Glencore will be outside the preferred guidelines for its credit rating they see this as a temporary (around 6-18-month) issue. In its funding factsheet, released 6 October, Glencore outlined the limited impact of a credit rating downgrade.</p><p>Given our lower commodity price assumptions, we reduce our target price from 220p to 190p. However, this still leaves upside of over 50% to our target price, and we remain positive on the stock, retaining our Speculative Buy recommendation. There are clearly still potential risks should commodity prices decline further but we believe that the shares have been oversold on debt concerns. Certainly, the ratings agencies don’t seem to be as troubled as some in the equity market; investors should take note of that. </p> <a href="https://www.theguardian.com/business/marketforceslive/2015/oct/08/ftse-falters-ahead-of-central-bank-updates-with-glencore-losing-ground-again">Continue reading...</a>BusinessStock marketsGlencoreFresnilloBHP BillitonAnglo AmericanAvivaKingfisherThu, 08 Oct 2015 08:38:18 GMThttp://www.theguardian.com/business/marketforceslive/2015/oct/08/ftse-falters-ahead-of-central-bank-updates-with-glencore-losing-ground-againPhotograph: MICHAEL BUHOLZER/REUTERSPhotograph: MICHAEL BUHOLZER/REUTERSNick Fletcher2015-10-08T08:38:18ZFTSE 100 falls, led by Glencore and Kingfisher but Arm gains againhttps://www.theguardian.com/business/marketforceslive/2015/sep/15/ftse-100-falls-led-by-glencore-and-kingfisher-but-arm-gains-again
<p>Investors nervous after Chinese market drops and ahead of Fed rate decision</p><p>Leading shares are heading lower once more as China’s markets continue to fall and ahead of the US interest rate decision on Thursday.</p><p>But for the second day running, chip designer <strong>Arm</strong> is outperforming. On Monday it was lifted by hopes of a good performance from key customer Apple - confirmed when the US group revealed positive sales figures for its new iPhone products. </p><p>Arm has made a surprise announcement ahead of its investor day, signalling it will increase operating expenses to drive additional sales<strong>. </strong>On a near term view, this news could limit stock price performance as it will cap 2016 estimated earnings per share momentum. However, if the company can successfully justify its confidence in the additional sales growth which the opex investment should drive, this will ultimately increase the longer term value of the business. Our investment view on Arm is based on our positive long term view and for now we retain our 1140p 2020 estimated royalty- driven target price.</p> <a href="https://www.theguardian.com/business/marketforceslive/2015/sep/15/ftse-100-falls-led-by-glencore-and-kingfisher-but-arm-gains-again">Continue reading...</a>BusinessStock marketsARMGlencoreBHP BillitonRio TintoKingfisherExperianTue, 15 Sep 2015 08:41:08 GMThttp://www.theguardian.com/business/marketforceslive/2015/sep/15/ftse-100-falls-led-by-glencore-and-kingfisher-but-arm-gains-againPhotograph: MICHAEL BUHOLZER/REUTERSPhotograph: MICHAEL BUHOLZER/REUTERSNick Fletcher2015-09-15T08:41:08ZFTSE 100 shrugs off China concerns, while Arm jumps on Apple hopeshttps://www.theguardian.com/business/marketforceslive/2015/sep/14/ftse-100-shrugs-off-china-concerns-while-arm-jumps-on-apple-hopes
<p>Chip designer biggest riser in FTSE 100 on positive report on key customer</p><p>Despite further concerns about China following the weekend’s weak factory output and investment figures, leading shares are heading higher.</p><p>Traders are already turning their attention to this week’s US Federal Reserve meeting, which had been widely expected to see a rise in interest rates until the recent volatility around China.</p><p>Arm is top of the FTSE tree this morning retracing some of the post-Apple weakness last week that took the wind from the sails of its recovery from 2015 lows. Some positive weekend reviews of Apple’s latest product launch/updates/initiatives is serving to offset the initial scepticism voiced by a highly critical investment community (losing its edge?) even if technology geeks and the Apple faithful were more than satisfied, as they tend to be.</p><p>There is also some digesting of the announcement earlier in the month of Arm’s partnership with chip-rival IBM to strengthen each other’s Internet of Things (IoT) businesses. This is an area focused on connecting devices such as phones and watches to everyday objects such as boilers and fridges, as well as to each other and the cloud. Research firm IDC estimates the market for IoT at $656bn last year with potential to more than double to $1.7bn by 2020 which could be a nice area of growth to be involved in should sales of phones and tablets (Apple and other brands) slow up more than expected.</p><p>This is the first analyst day for new chief financial officer Chris Kennedy, previously of easyJet, which under his term became active in capital returns with multiple special dividends and ordinary dividend payout increases. Arm has a strong balance sheet with £904m in cash and free cash flow yield of 3.5% in 2016 growing to 6.0% in 2020 versus a current dividend yield of 1.0% – hence we believe there is plenty of room for more returns at Arm, given the relative immunity to the semis cycle. It may be too early for the new CFO to announce a less cautious capital return plan, but we expect the subject to be raised in the Q&amp;A. </p><p>We remain buyers of Arm in a context of rising royalty rates and with an estimated PE of 32 times in 2015 and 27 times in 2016. </p> <a href="https://www.theguardian.com/business/marketforceslive/2015/sep/14/ftse-100-shrugs-off-china-concerns-while-arm-jumps-on-apple-hopes">Continue reading...</a>BusinessStock marketsARMAppleBHP BillitonRio TintoAnglo AmericanMorrisonsKingfisherMon, 14 Sep 2015 08:57:52 GMThttp://www.theguardian.com/business/marketforceslive/2015/sep/14/ftse-100-shrugs-off-china-concerns-while-arm-jumps-on-apple-hopesPhotograph: MONICA DAVEY/EPAPhotograph: MONICA DAVEY/EPANick Fletcher2015-09-14T08:57:52ZFTSE 100 falls to two month low on Greek woes, but Kingfisher climbshttps://www.theguardian.com/business/marketforceslive/2015/jun/04/ftse-100-falls-to-two-month-low-on-greek-woes-but-kingfisher-climbs
<p>Investors concerned as Greece edges closer to deadline for deal</p><p>Leading shares fell to a two month low as the brinkmanship over Greece continued despite another round of late night meetings.<br></p><p>With clear differences between the proposals put forward by the Greek government and the country’s creditors, the prospect of an imminent deal is looking slim. Greece is expected to make a €305m payment to the International Monetary Fund on Friday, but time is tight for an agreement before the cash runs out.</p><p>[The falls follow] news that one Chinese broker is cutting back on margin trading, and this signals the strain the second-largest economy in the world is under. China’s economy is too dependent on credit and it feels like the pressure cooker is about to blow.</p><p>Dairy Crest sounds confident that its dairy sale to Muller will be cleared by the Competitions and Markets Authority, which will pave the way to it becoming a largely branded, UK food company. We feel there is some upside potential in the stock price if all goes to plan, without assuming any bid speculation, which could arise once the group sheds what has been a very effective “poison pill”. We move to a buy with a new target price of 554p.</p><p>The last 12 months have been challenging for the oil and gas sector and in particular for Tullow. In order to withstand the current subdued macro environment, the company has increased and diversified its sources of debt capital, reduced its exploration expenditure, implemented significant cost saving initiatives, and suspended its dividend. We believe however that an overreliance on debt to fund risky ventures could prove costly. We initiate coverage with a sell recommendation and target price of 342p.</p><p>Following a detailed and aggressive review, the senior management team has decided to take a major provision against a fixed price contract in the enterprise solutions and defence division, which appears to have been substantially underestimated. This provision, together with the forex impact of continuing sterling strength, is likely to virtually eliminate the expected profit this year.</p><p>We therefore reduce our 2015 forecast adjusted pretax profit from £3.3m to £0.3m. There is likely to be a spill over into 2016 as staff are reallocated to complete the contract – set for delivery in February – and we reduce next year’s pretax profit forecast from £3.8m to £2.4m. Cash balances will be low and the company risks breaching banking covenants; however, the banks remain supportive and Scicys is underpinned by a strong balance sheet with £9m of property, including a £5m headquarters near Chippenham. We anticipate the dividend strategy will be unchanged. Overall, this is disappointing but it is a ring-fenced one-off issue and procedures have been amended to ensure no recurrence.</p> <a href="https://www.theguardian.com/business/marketforceslive/2015/jun/04/ftse-100-falls-to-two-month-low-on-greek-woes-but-kingfisher-climbs">Continue reading...</a>BusinessJohnson MattheyBHP BillitonAnglo AmericanNational GridWPPRoyal MailKingfishereasyJetDairy CrestLadbrokesTullow OilThu, 04 Jun 2015 16:07:59 GMThttp://www.theguardian.com/business/marketforceslive/2015/jun/04/ftse-100-falls-to-two-month-low-on-greek-woes-but-kingfisher-climbsPhotograph: JUSTIN LANE/EPAPhotograph: JUSTIN LANE/EPANick Fletcher2015-06-04T16:07:59ZFTSE begins quarter on strong note as banks move higherhttps://www.theguardian.com/business/marketforceslive/2015/apr/01/ftse-begins-quarter-on-strong-note-as-banks-move-higher
<p>Positive analysts comments lift banks but miners mixed despite Chinese data</p><p>After a downbeat end to the first three months of the year, leading shares have begin the new quarter on a better note.</p><p>The <strong>FTSE </strong><strong>100</strong> finished 36.46 points higher at 6809.5, helped by better than expected eurozone manufacturing data for March (as shown by the latest purchasing managers indices). There was also solid growth in UK manufacturing, although productivity figures disappointed, coming in at the weakest level since the Second World War.</p><p>When ISM manufacturing posts its first five-month decline since the 2008 financial crises, it’s time to seriously reassess a bullish outlook on the US economy. Looking at the last two quarters, it’s really just non-farm payroll employment growth that’s the one leg the Fed can stand on to justify higher interest rates.</p><p>Given the strength of job gains it would be unlikely to see a huge drop on Friday but perhaps a slowdown of momentum is overdue and this might be all that’s needed for rate-hike expectations to be drastically adjusted. </p><p>We believe that Sports Direct has the potential to replicate its UK success in many (though not all) European markets. Even after discounting our valuation by 20% to reflect corporate governance issues, we think the shares are attractive and initiate with an overweight rating.</p><p>[This is] a trading update which is distinctly mixed: Napier Brown trading is poor; elsewhere is good. [But] Napier Brown – despite its current problems – is clearly drawing substantial interest. Clearly the group has a positive set of options here. The balance of the group has issued a positive trading update and is cash generative with strong margins and growth.</p><p>A “transaction” might indicate a joint venture, but of course a transaction cannot be guaranteed. Nonetheless Napier Brown is the largest EU independent sugar distributor: a great, well‐invested strategic attraction.</p><p>Real Good Food experienced a challenging year last year due to the low sugar price. However, looking forward, the outlook is much improved, particularly if a transaction involving Napier Brown, which makes good strategic sense in our view ahead of the end of European quotas in 2017, is completed. The acquisition of Rainbow Dust Colours, the fast-growing specialist cake decoration and accessories business, in January (revenue £3m; pre-tax margin 57%) further tilts the business towards higher growth and higher margin businesses and is already opening doors for the wider Real Good Food group in a range of export markets. </p> <a href="https://www.theguardian.com/business/marketforceslive/2015/apr/01/ftse-begins-quarter-on-strong-note-as-banks-move-higher">Continue reading...</a>BusinessAnglo AmericanRio TintoFresnilloRandgold ResourcesBarclaysLloyds Banking GroupSports Direct InternationalBPRoyal Dutch ShellKingfisherFirstGroupGo-AheadWed, 01 Apr 2015 16:49:05 GMThttp://www.theguardian.com/business/marketforceslive/2015/apr/01/ftse-begins-quarter-on-strong-note-as-banks-move-higherPhotograph: Spencer Platt/Getty ImagesPhotograph: Spencer Platt/Getty ImagesNick Fletcher2015-04-01T16:49:05ZFTSE sees best quarter for two years despite last minute drophttps://www.theguardian.com/business/marketforceslive/2015/mar/31/ftse-sees-best-quarter-for-two-years-despite-last-minute-drop
<p>Tobacco shares hit by doubts about US merger, while miners lose support on China news</p><p>The FTSE 100 managed to record its best quarterly performance for two years, but the three months ended on a downbeat note as investors seized the opportunity to cash in some of their profits.</p><p>Tobacco shares were among the day’s main fallers. Reports that the US Federal Trade Commission wanted to block the $27bn merger between Lorillard and Reynolds hit<strong> Imperial Tobacco</strong> and <strong>British American Tobacco</strong>, who both stood to benefit if the deal went ahead.</p><p>After such a bullish day’s trading [on Monday], the end of the first quarter looks to be triggering a little bit of profit-taking. The Dow has only added 0.75% year to date while the FTSE, weighed down by struggling commodity companies, has only fared slightly better returning 3.2%. The standout, when based in euros, has been the Dax as it started the day up by roughly 22%, the strongest first quarter seen in almost two decades. When viewed within the context of its performance year to date, German equity traders will probably be only too happy to give a little back today.</p> <a href="https://www.theguardian.com/business/marketforceslive/2015/mar/31/ftse-sees-best-quarter-for-two-years-despite-last-minute-drop">Continue reading...</a>BusinessImperial TobaccoBritish American TobaccoAnglo AmericanBHP BillitonAntofagastaMeggittKingfisherMitieFindelTue, 31 Mar 2015 16:18:18 GMThttp://www.theguardian.com/business/marketforceslive/2015/mar/31/ftse-sees-best-quarter-for-two-years-despite-last-minute-dropPhotograph: MICHAELA REHLE/REUTERSPhotograph: MICHAELA REHLE/REUTERSNick Fletcher2015-03-31T16:18:18ZFTSE dips but set for best quarter for two yearshttps://www.theguardian.com/business/marketforceslive/2015/mar/31/ftse-dips-but-set-for-best-quarter-for-two-years
<p>Mining shares slip on Chinese news but Antofagasta up despite denying merger talks</p><p>Leading shares are ending the quarter on an uncertain note, but are still on track for their best three month performance since the start of 2013.</p><p>More stimulus moves from China with the easing of mortgage rules seem to have disappointed, giving little support to the commodity sector. Meanwhile concerns about Chinese consumer spending has hit the likes of <strong>Burberry</strong>, down 18p at £17.54, and <strong>Imperial Tobacco</strong>, 39p lower at £30.29.</p><p>Our initial reaction to any potential deal is puzzlement, seeing no obvious benefits to Antofagasta. Operating synergies would be relatively small. Strategically we see no benefits to Antofagasta’s minority shareholders from diversification into coal and zinc (although this does hinge on long-term prices); plus risk of a major de-rating risk from losing the pure-play copper premium. The only good rationale would be if [Antofagasta’s copper mine] Los Pelambres really is at risk (in which case Teck would walk). </p><p>Burberry, BAT and Imperial Tobacco are all struggling and given news of the Chinese stimulus measures released overnight with the easing of mortgage rules, there could well be some read across here. Consumer demand is waning and it’s the aspirational or luxury brands that will be left most exposed. Furthermore, this round of stimulus from Beijing may have fallen short of expectations.</p><p>Buoyed by bid speculation, the company has outperformed this past 12 months and trades close to its relative highs. However we don’t believe that the group’s earnings quality and increasing pressure on an already weak cash conversion support a takeout above the current price. We see a future where investment continues to rise, impacting cash generation, without sufficient offset from accelerating organic sales growth. An ending/slowing of the share buyback programme could be a catalyst for underperformance. </p> <a href="https://www.theguardian.com/business/marketforceslive/2015/mar/31/ftse-dips-but-set-for-best-quarter-for-two-years">Continue reading...</a>BusinessBurberryImperial TobaccoAnglo AmericanRio TintoAntofagastaMeggittKingfisherMitieTue, 31 Mar 2015 08:41:25 GMThttp://www.theguardian.com/business/marketforceslive/2015/mar/31/ftse-dips-but-set-for-best-quarter-for-two-yearsPhotograph: CHINA DAILY/REUTERSPhotograph: CHINA DAILY/REUTERSNick Fletcher2015-03-31T08:41:25ZFTSE lifted by Chinese growth hopes and strong start on Wall Streethttps://www.theguardian.com/business/marketforceslive/2015/mar/30/ftse-lifted-by-chinese-growth-hopes-and-strong-start-on-wall-street
<p>US market surges after series of deals unveiled and positive comments from China</p><p>A rise in mining shares and a strong start on Wall Street helped lift the FTSE 100 after four days of decline.</p><p>Commodity companies were supported by comments over the weekend from Chinese premier Xi Jinping, who unveiled new infrastructure plans, while dealers anticipated further interest rate cuts to boost demand.</p><p>Revenues [were] 1% above our and consensus expectations, but adjusted earnings per share 8% lower than consensus. Whilst EBITDA margin was only 40 basis points lower than conensus, higher depreciation and lower interest income contributed to the miss. Looking forward, the company points to positive underlying demand drivers in the region, but acknowledges continued difficult trading conditions in its Khalifa Street Hospital (competition, physician attrition and refurbishment), and “anticipates that 2015 is likely to see a further increase in costs as investment is made in the short term” before efficiencies flow towards end-2015 and into 2016. This is in line with our expectations, and we therefore remain comfortable with margin forecasts significantly below consensus. Shares have run up into these results, and we therefore reduce our recommendation to hold. Once we see consensus expectations moderate, we are likely to become more positive, since we see considerable longer-term upside from improving efficiency from doctors hired over the last two years.</p> <a href="https://www.theguardian.com/business/marketforceslive/2015/mar/30/ftse-lifted-by-chinese-growth-hopes-and-strong-start-on-wall-street">Continue reading...</a>BusinessAntofagastaRio TintoKingfisherARMCompassBabcock InternationalSABMillerMorrisonsMon, 30 Mar 2015 16:48:38 GMThttp://www.theguardian.com/business/marketforceslive/2015/mar/30/ftse-lifted-by-chinese-growth-hopes-and-strong-start-on-wall-streetPhotograph: Mark Lennihan/APPhotograph: Mark Lennihan/APNick Fletcher2015-03-30T16:48:38ZFTSE 100 moves higher with mining shares lifted by Chinese hopeshttps://www.theguardian.com/business/marketforceslive/2015/mar/30/ftse-100-moves-higher-with-mining-shares-lifted-by-chinese-hopes
<p>Leading index shrugs off four days of falls but CRH drops on new merger worries</p><p>Leading shares have moved higher after four days of decline, helped by a revival in the mining sector.</p><p>Over the weekend President Xi Jinping announced new infrastructure plans and also talked up the state of the country’s economy. And with traders believing interest rates will be cut if there are signs of a sustained slowdown, the comments have supported markets.</p> <a href="https://www.theguardian.com/business/marketforceslive/2015/mar/30/ftse-100-moves-higher-with-mining-shares-lifted-by-chinese-hopes">Continue reading...</a>BusinessAnglo AmericanRio TintoKingfisherCRHBGCompassARMSuperGroupTechnologyMon, 30 Mar 2015 08:43:30 GMThttp://www.theguardian.com/business/marketforceslive/2015/mar/30/ftse-100-moves-higher-with-mining-shares-lifted-by-chinese-hopesPhotograph: Bloomberg/Bloomberg via Getty ImagesPhotograph: Bloomberg/Bloomberg via Getty ImagesNick Fletcher2015-03-30T08:43:30ZFTSE 100 rebounds with retailers boosted by business rate hopeshttps://www.theguardian.com/business/marketforceslive/2015/mar/16/ftse-100-rebounds-with-retailers-boosted-by-business-rate-hopes
<p>Bricks and mortar companies lifted by goverment review, but CRH hit by merger worries</p><p>As the market rallied after last week’s falls, retailers were among the biggest gainers.</p><p>Bricks and mortar companies were boosted by <a href="http://www.theguardian.com/politics/2015/mar/16/uk-business-rate-review">the prospect of lower business rates</a>, which could help limit the number of high street closures and help them fend off competition from online firms with lower fixed costs.</p><p>We think M&amp;S’ ecommerce performance is likely to have improved since mid-February when it annualised its web platform change last year and as systems disruption has eased. Our survey of 700 UK shoppers late last year showed that M&amp;S’ website is well regarded which suggests that the demand is there if M&amp;S can improve on its execution and fulfilment. </p><p>On the food side of the business (around 50% of sales, 40% of profit), we believe M&amp;S is benefitting from being an events driven business, with strong performances around recent events such as Valentine’s Day and Mother’s Day. M&amp;S Food is less reliant on the regular weekly shop than other grocers and also has a higher food to go offer. As such it should be less exposed to heavy food price deflation.</p><p>Foreign exchange concerns, driven by the euro weakness, and uncertainties relating to the Indian spectrum auction, have seen Vodafone underperform the FTSE and telcoms sector by 5% and 15% (7% in euro terms) respectively so far this year. Whilst these overhangs may persist short term, April should see attention refocus onto the full year results and Vodafone’s improving European outlook. Crucially we anticipate ongoing sequential improvements in organic revenue growth, with this largely predicated on southern Europe, and believe this should enable Vodafone to return to growth in the second half, supporting a material multiple re-rating.</p><p>With new management installed and the turnaround under way, we look to 2016 and 2017 profits to drive our valuation. Applying recovery multiples to our 2016 and 2017 estimates implies a price target of 270p, hence we upgrade our rating to buy [from underperform]. Though construction risks remain for 2015, we take comfort in the group’s £1.3bn PPP portfolio and the incoming management’s long term incentive plans.</p> <a href="https://www.theguardian.com/business/marketforceslive/2015/mar/16/ftse-100-rebounds-with-retailers-boosted-by-business-rate-hopes">Continue reading...</a>BusinessJ SainsburyTescoKingfisherNextMarks & SpencerCRHBalfour BeattyMon, 16 Mar 2015 16:56:09 GMThttp://www.theguardian.com/business/marketforceslive/2015/mar/16/ftse-100-rebounds-with-retailers-boosted-by-business-rate-hopesPhotograph: TOBY MELVILLE/PAPhotograph: TOBY MELVILLE/PANick Fletcher2015-03-16T16:56:09ZFTSE shrugs off Chinese slump, while Dixons gains on Christmas hopeshttps://www.theguardian.com/business/marketforceslive/2015/jan/19/ftse-shrugs-off-chinese-slump-while-dixons-gains-on-christmas-hopes
<p>Leading shares lifted by hopes of quantitative easing from European Central Bank this week</p><p>Despite a slump in the Chinese stock market, European investors were in a positive mood in anticipation that the European Central Bank will authorise some measure of quantitative easing at its meeting on Thursday.</p><p>With no distractions from Wall Street - closed for Martin Luther King Day - the optimism helped the <strong>FTSE 100</strong> rise 35.26 points to 6585.53.</p><p>Tesco has a meaningful opportunity to improve the efficiency of its UK operations. Tesco’s margin-led strategy in recent years not only led to market share losses, it significantly complicated the business, as the focus on vendor allowances led to a proliferation of stock keeping units [products]. We estimate the average SKU count at Extra hypermarkets in the UK rose from around 55,000 in 2004 to around 75,000 in 2014. Tesco plans to reverse this trend.</p><p>Support from branded goods manufacturers could become a key weapon in the battle with discounters. Branded goods have been losing UK market share in the past five years. The example of the French grocery market shows that, when leading branded goods manufacturers share in conventional food retailers’ efforts to improve price positioning, it can have a powerful impact on the hard discounters: after rising steadily for 15 years, the [discounters’] share in France fell from 14.3% in 2008 to 11.7% in 2014.</p> <a href="https://www.theguardian.com/business/marketforceslive/2015/jan/19/ftse-shrugs-off-chinese-slump-while-dixons-gains-on-christmas-hopes">Continue reading...</a>BusinessDixons CarphoneKingfisherTravis PerkinsTescoBalfour BeattyGlencoreBHP BillitonRio TintoMon, 19 Jan 2015 16:58:49 GMThttp://www.theguardian.com/business/marketforceslive/2015/jan/19/ftse-shrugs-off-chinese-slump-while-dixons-gains-on-christmas-hopesPhotograph: ANDY RAIN/ANDY RAIN/epa/CorbisPhotograph: ANDY RAIN/ANDY RAIN/epa/CorbisNick Fletcher2015-01-19T16:58:49Z